Hedge funds increased bets on lower gold prices after investors pulled a record $20.8 billion from bullion funds this year while BlackRock Inc. (BLK), the world’s biggest money manager, said it’s still bullish.

Speculators held 67,374 so-called short contracts on May 7, 6.4 percent more than a week earlier, U.S. Commodity Futures Trading Commission data show. The net-long position dropped 10 percent to 49,260 futures and options. Net-bullish wagers across 18 U.S.-traded raw materials climbed 5.8 percent to 582,265, with gains for cocoa, cotton and hogs.

Gold is having its worst start to a year since 1982 after dropping 15 percent and sliding into a bear market in April. Holdings in exchange-traded funds backed by bullion tumbled to the lowest since July 2011 even as central banks print money on an unprecedented scale to boost growth. BlackRock’s President Robert Kapito said May 9 he would still buy the metal, echoing billionaire John Paulson, who’s sticking with a bullish view even after losing 27 percent in his Gold Fund last month.

“People have been told the world is going to end for five years, and it hasn’t, so they’re finally moving on,” said James Paulsen, the Minneapolis-based chief investment strategist at Wells Capital Management, which oversees $325 billion of assets. “So even when crisis flashes now, you don’t get the same upside, and then in good times, you get more downside, and that’s what you’re getting in gold as the Armageddon premium is coming out.”

Gold Declines

Gold futures fell 1.9 percent to $1,436.60 an ounce on the Comex in New York last week. The Standard & Poor’s GSCI Spot Index of 24 commodities slid 0.3 percent, and the MSCI All-Country World of equities added 0.9 percent. The dollar climbed 1.2 percent against a basket of six major currencies. A Bank of America Corp. Index shows Treasuries dropped 0.6 percent. Gold for June delivery fell 0.3 percent to $1,432.60 an ounce by 9:02 a.m. in New York.

Bullion slumped last week after a May 9 government report showed the average number of Americans filing for jobless benefits over the past month dropped to the lowest since November 2007. Federal Reserve Bank of Philadelphia President Charles Plosser said that day unemployment will probably decline to 7 percent at the end of 2013 and he would favor reducing the Fed’s $85 billion monthly pace of bond purchases next month. Plosser doesn’t vote on policy this year.

Fund Outflows

Money managers withdrew $1.27 billion from gold and precious-metals funds in the week ended May 8, according to Cameron Brandt, the director of research for Cambridge, Massachusetts-based EPFR Global, which tracks money flows. This year’s outflows of $20.8 billion are the largest withdrawals since the firm began tracking the data in 2000.

A majority of the 38 analysts surveyed by Bloomberg last month predicted the metal will decline in 2013, ending a 12-year bull run. Billionaire investor Warren Buffett said May 2 that gold has no appeal even after the rout. The drop in global ETP holdings wiped $37.4 billion of value from the assets this year, while more than $4.6 trillion has been added to the value of global equities, data compiled by Bloomberg show.